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Opinion Contributor

Congress should even retail playing field

Online sellers are given up to a 10 percent price advantage, the authors write. | Reuters

By REP. STEVE WOMACK and REP. JACKIE SPEIER | 11/25/12 9:13 PM EST

Black Friday formally kicked off the holiday shopping season and, today, the shopping continues online as we celebrate Cyber Monday. Created in 2005, Cyber Monday has rapidly become one of the biggest online shopping days of the year.

Last year, online retailers had their best holiday season ever, and sales on Cyber Monday alone exceeded $1.25 billion. This year, the National Retail Foundation projects that online sales will grow 12 percent and could exceed $2 billion.

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Main Street retailers also have seen holiday sales growth. However, online sales are growing three times faster and are predicted to eclipse brick-and-mortar sales by 2020.

Businesses’ bottom lines often depend on Black Friday and the retail holidays that follow to provide a boost and put them into the “black.” Forty-six states and thousands of local municipalities also depend on these sales to generate tax revenues that support their budgets and the essential services they fund.

But an outdated Supreme Court decision has created a fundamental marketplace unfairness that costs states at least $23 billion every year and is killing our Main Street businesses.

Twenty years ago, when Quill v. North Dakota determined that states could not collect sales tax from remote — or out-of-state — sellers, our shopping habits were drastically different and it would have been impossible to predict how the Internet would change them. The same technology that has allowed the dramatic growth of the online retail marketplace has also significantly reduced the burden of complying with state tax laws.

Today, this relic of a Supreme Court decision allows online-only retailers to avoid collecting and remitting sales taxes. These online sellers are given up to a 10 percent price advantage, instead of competing on the price of the product itself. Consequently, while consumers everywhere are misled into believing their purchases are “tax free,” small retailers have become little more than a “showroom” for their online counterparts.

The responsibility of paying sales and use taxes is shifted to the consumer, who is obligated to track and pay these taxes at the end of the year. But enforcement is virtually impossible and only about three people out of 1,000 actually comply.

In these tough economic times, states are looking to collect what they are owed instead of being forced to raise taxes to support the most basic local services — firefighters, police and even local schools. For this reason, the National Governors Association and the National Conference of State Legislatures have cited e-fairness as their No. 1 legislative priority for the remainder of the 112th Congress.

Small businesses and states alike are suffering, and only Congress has the power to close this loophole. The Marketplace Equity Act of 2011 (H.R. 3179) is the common-sense — and bipartisan — solution.

By granting states the power to enforce their own laws, MEA levels the playing field between brick-and-mortar businesses and online-only retailers and allows customers, rather than the federal government, to pick marketplace winners and losers.

Main Street jobs and the futures of our communities are at stake, and it’s time Congress takes action.

Rep. Steve Womack, a Republican, represents the 3rd District of Arkansas. Rep. Jackie Speier, a Democrat, represents the 12th District of California.

Look, online retailers are not the same as brick and mortar stores. They do not take up real estate, they do not use town and state resources to provide water, police and fire protection and traffic issues. Using internet sales to fund local government is a dangerous proposition that will do little change the shopping habits of Americans in a changing retail environment. People like to shop from home. It saves time, it saves fuel, and it saves aggravation and yes it saves money. Towns and cities have got to stop looking for new and unique ways to find revenue to fund things they don't really need. In my State there seems to be a gold rush of artificial turf football fields at up to 2 million dollars each because the town "needs" them. Wrong. The want them, but don't need them. That is just one example of the bloating of small government that looks to find another cash cow. Taxing internet sales will hurt the poorest in the country and will be an expensive proposition as States find a way to collect taxes from millions of scattered buisness making billions of scattered sales. Not a simple task or a simple solution.And certainly not the savior of brick and mortar buisness.

it's the real big retailers who can't compete with the web-only sellers who'll really be saved

When Walmart of Target sells on their websites, they're forced to collect because they also have a physicl presence all over. They are thus at a competitive disadvantage - even for web sales - with web-only sites.

Not even close. Medicare has an administrative overhead of between 1% and 2%. Some people, depending on how you look at the numbers, put it closer to 5%. But your 70% number is not anywhere near reality. In comparison, private insurance is usually about 11% - 12% overhead.

Hey Steve & Jackie...stay out of the economic process! You guys (aka Congress & Washington D.C.) have created more problems for the economy rather than helping it. Steve...I am surprised to see that you would write such a thing, since you should know better. I am not so suprised Jackie would write what she does, being that she represents D.C. I got an idea, how about cutting your pay in half and forfeiting your pension, then you can talk about sacrifice. Then, we could see a practicing what you preach!

Sales tax are primarily a regressive tax so there is no reason for the federal government to support this system of taxation by the states. the online companies use no resources of the state, so they receive no value for their tax dollars. The states require individuals to pay taxes on out of state purchases, however they find enforcement a bit tough, no one I know actuallypays this.If the taxes would go to an income tax it would be both fairer transparent

It isn't a secret to anyone that the socialist/liberals intend to tear down and rebuild this nation into some sort of socialist nirvana. Now that they have a president and cooperative congress with a nuetered opposition party; preparations are now in place and locked down ( ie: control of educational system from bottom to top, media/entertainment/communications).

They have now unveiled the weapon they intend to use to bring this country to it's knees. That weapon is " fairness ". A nice word that everyone wants to be, but the definition of fairness is about to change so many times I doubt that Merriam-Webster dictionary will be able to keep up.

Last time I looked...at some online retailers there is that thing called shipping...so dont make the advantage out to be more than it is...because even if shipping is free to us, someone is eating that cost

umm.....wrong! Maybe the government should try to spend less money, rather than finding creative ways to take more of OUR money out of our pockets.

For example, 70% of every dollar sent to medicare goes to administration, while only 30% actually buys actual health care.

You think maybe we should send them more money?

Your comment is an absolute lie. Per politifact, The trustees’ summary listed total Medicare expenditures of $522.8 billion for 2010, of which $7 billion was characterized as "administrative expenses." That works out to 1.3 percent -- not far off from what Boxer stated.

For the private insurance market, we turned to a 2008 study by the Congressional Budget Office, the nonpartisan number-crunching arm of Congress. CBO cited data, compiled by the McKinsey Global Institute, that estimated administrative costs for private insurers at 12 percent.

First, other government agencies help administer the Medicare program. The Internal Revenue Service collects the taxes that fund the program; the Social Security Administration helps collect some of the premiums paid by beneficiaries (which are deducted from Social Security checks); the Department of Health and Human Services helps to manage accounting, auditing, and fraud issues and pays for marketing costs, building costs, and more.

But most important, because Medicare patients are older, they are substantially sicker than the average insured patient — driving up the denominator of such calculations significantly. For example: If two patients cost $30 each to manage, but the first requires $100 of health expenditures and the second, much sicker patient requires $1,000, the first patient’s insurance will have an administrative-cost ratio of 30%, but the second’s will have a ratio of only 3%. This hardly means the second patient’s insurance is more efficient — administratively, the patients are identical.

Of course, online purchases require you to pay for shipping, which you do not have to do in a brick and mortar store. By requiring online retailers to collect the same sales tax plus charge for shipping, you are creating an unfair advantage for the brick and mortar stores.

Im shocked to see Politico follow that Democrats talking point that more taxes will solve all problems.

Wow tjb152, are you really this stupid? If so, then please let me explain it for you...

This is an opinion piece co-written by Reps. Steve Womack (R) and Jackie Speier (D). They are sitting US congress members, not members of Politico's paid staff. Their opinions are not necessarily representative of those held by Politico's editorial board. It is much like when Fox gets some Republican politician to write content for them, except in this case it is a bipartisan message.

I read Medicare is FAR more efficient than private insurance in administrative cost.

Don't you think the private sector has a great incentive to become more efficient than the government sector?

Wouldn't just plain logic suggest that?

How is it that a goverment agency could be so vastly more efficient than a private counterpart?

Since that possibility seems to go against what is considered rational, how is it possible?

Consider the fact that Medicare depends on the actions of other government agencies to operate. Other government agencies who's costs are not included in the calculations for administrative costs.

For example:

First, other government agencies help administer the Medicare program. The Internal Revenue Service collects the taxes that fund the program; the Social Security Administration helps collect some of the premiums paid by beneficiaries (which are deducted from Social Security checks); the Department of Health and Human Services helps to manage accounting, auditing, and fraud issues and pays for marketing costs, building costs, and more.

Many of Medicare’s most significant administrative costs are just covered by other federal agencies, and so don’t appear on Medicare’s particular budget, but are still huge costs of the program. The IRS collects the taxes that fund the program; Social Security collects many of the premiums paid by beneficiaries; HHS pays for a great deal of what you would think of as basic overhead, but doesn’t put it on the Medicare program’s budget. Obviously private insurers have to pay for such things themselves. Medicare’s administration is also exempt from taxes, while insurers pay an excise tax on premiums (which is counted as overhead). And private insurers also spend a great deal of money fighting fraud, while Medicare doesn’t. That might reduce the program’s administrative costs, but it greatly increases its overall costs. Some administrative costs save money, after all: The GAO has estimated that a $1 investment in pre-payment review of claims, for instance, would save $21 in improper Medicare payments.

There is no way in the world that a government agency is more efficient than private industry, it is just not possible and I would ask for one example of an efficient government program or agency.

'BamaDon - it is obvious you have never had dealings with the government. Private companies have to make customers happy or they go out of business because that is the way a free market works. It is the government who has no incentive to make citizens happy because you have no choice to go anywhere else. Why is it that virtually everyone who can send their children to private school, including President Obama, does? Because private schools are consistently better than public schools. Why is it that the post office is going bankrupt while UPS and Fed Exp are doing fine? Because Fed Exp and UPS work hard to make customers happy, while the post office doesn't. The Department of Energy, produces no energy and was started when Gas cost $0.62 a gallon to control the cost of energy. Gas costs $3.60 a gallon now so we can all see how good of a job the DoE has done. The department of Education was created in 1979 to improve education and now we graduate fewer students and they know considerably less than they did 30 years ago. I can site example after example but seeing you are oblivious to reality, it would be a waste of key strokes.

"Government" simplified - You are greedy if you want to keep what you worked for, but you are not greedy if you want a piece of what someone else worked for.

"Fairness" as seen by the government, simplified - If you contribute 70% of what the government takes in you are not paying your fair share, while if you contribute nothing, you are paying your fair share.

"Insanity" simplified - Voting for the buffoon Obama a second time and expecting a different outcome from the last 4 years.

Ben Franklyn

Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.

When the people find that they can vote themselves money, that will herald the end of the republic.

'BamaDon - it is obvious you have never had dealings with the government. Private companies have to make customers happy or they go out of business because that is the way a free market works.

Right. I live in Somalia (where there is no government). I was in the Marines for 3 years, I'd say that's dealing with the government.

You pompous ass.

Insurance companies only care about employers, not the actual employees that use the insurance, and all the employers care about is cost, so insurance companies cut benefits and give a lower cost, and employers are happy. Also, there are only a handful of insurance providers, and in many areas there's a defacto monopoly, so the illusion of competition is just that - an illusion.